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Orange Grove Management

Orange Grove Management. Rafael Alvarez Sylia Gallegos Juan Carlos Gonzalez Sky Noyd. Orange Grove Overview. Orange Grove located in Alamo Veracruz, Mexico 28.9 acre property, including 3,932 new orange trees Seven different varieties of oranges: Tardias Navels Mayeras

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Orange Grove Management

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  1. Orange Grove Management Rafael Alvarez Sylia Gallegos Juan Carlos Gonzalez Sky Noyd

  2. Orange Grove Overview • Orange Grove located in Alamo Veracruz, Mexico • 28.9 acre property, including 3,932 new orange trees • Seven different varieties of oranges: • Tardias • Navels • Mayeras • Zarsuma • Delicias • Mars • Nova

  3. Objective • Maximize profit by analyzing the revenues and costs of production • Develop an IP model • Solve for the Revenue • Solve for the Costs • Profit = Revenue – Costs • Irrigation System? • Solve the model using AMPL

  4. Costs • The cost factors we will be analyzing are: • Fertilizer • Pesticide • Maintenance • Worker Salary • Tilling • Transportation (Shipping) • No previous records regarding costs • Used 3 sources to find costs • Juan and his family • Local engineer • Concitver.com

  5. Revenue • Options for selling fruit • On tree • Weigh station • Wholesaler • Price is determined by: • Size • Quality • Month of picking

  6. Considerations • Four Binary Variables • Pesticide, Fertilizer, Tilling, and Maintenance • Two Parameters • Revenue and Cost • Four Constraints • Harvesting seasons of each tree type

  7. Designing the Model • There will be production movement from month to month • Each node represents a month • There will be three basic costs associated with sales • All types of oranges will follow the Figure 1 generic production and sales model

  8. Analysis of the Model

  9. Example Model set Month; set Sell; param Revenue{Sell, Month} >= 0; param Cost{Sell, Month} >= 0; var X{Month} >= 0; var Y{Month} >= 0; var Z{Sell, Month} >= 0; var P binary; var F binary; var T binary; var M binary; maximize Profit: sum{i in Sell, j in Month} (Revenue[i,j] - Cost[i,j])*Z[i,j] - 390*F - 700*P - 225*T - 400*M; subject to Start: X[1] = 1932*(5 + 20*F + 10*P + 7.5*T + 7.5*M)/1000; subject to Balance{i in 1..3}: X[i] = Y[i] + X[i+1]; subject to Balance4: X[4] = Y[4]; subject to Selling{i in Month}: Y[i] = sum{j in Sell} Z[j,i];

  10. Example Data File set Month := 1, 2, 3, 4; set Sell := 1, 2, 3; param Revenue: 1 2 3 4 := 1 90 90 120 150 2 110 110 160 230 3 145 145 220 310 ; param Cost: 1 2 3 4 := 1 0 0 0 0 2 20 20 40 80 3 55 55 100 170 ;

  11. Projected Solution • Without irrigation total projected profit is estimated at $597,974 for the year • Tardias, Mayeras, and Mars trees • all activities are recommended • Navels, Nova, and Delicias trees • model recommends only using Pesticide and Maintenance for the return on fertilizer and pesticide would not cover their costs

  12. Projected Solution cont. • With irrigation the total projected profit is estimated at $881,506 for the year • Tardias, Mayeras, and Mars trees • all activities are recommended • Navels, Nova, and Delicias trees • model recommends only using Pesticide and Maintenance for the return on fertilizer and pesticide would not cover their costs

  13. Decision Analysis Results with Irrigation

  14. Irrigation System • The net present value of the projected profit to be gained over the next five years is $192,791. • When considering whether or not an irrigation system should be installed, at a price of $60,000 the estimated gain is still $132,791.

  15. Assumptions • Given by owner of orange grove • Estimated 30% increase in production from year to year in the projections

  16. Preguntas?

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